Surveyors Hinder Property Market Recovery

The latest analysis of the UK property market published in the Times Online has revealed that British surveyors are hampering the recovery of the property sector by undervaluing the properties and by lengthening the downturn of prices. A commercial law firm, McGrigors, claimed that according to the research, on average property surveyors are pricing properties 20% lower agreed prices. The undervaluing of properties usually results in the necessity for buyers to secure a larger deposit or to refuse from the purchase of a given property. Oftentimes, such activity leads to an increase in the number of so-called gazunders, people who reduce the offer at the late stages of the deal and contribute to further instability on the UK housing market. McGrigors representative says that the reports associated with a slower pace of property market falls, increased property prices and buyer enquiries could have been even more optimistic if UK property surveyors had not been hindering property prices. Suzanne Gill, a representative of McGrigors, added that the defensive valuations of surveyors, which are significantly below the agreed house prices, are preventing the growth of property prices and the completion of deals. She provides an example of buyer, willing to purchase a £120,000 property and seeking an 80% loan-to-value ratio mortgage deal given that he or she has a 20% deposit. The buyer should be able to take out as much as £96,000 in mortgage, and to pay a £24,000 deposit. However, if the price has been agreed the buyer and the seller prior to the property valuation, which resulted in the property is priced by the surveyor at £100,000, the buyer will only be able to take out £80,000 in mortgage. It is clear, that a property price of £120,000 and a mortgage of £80,000 leave the buyer with a necessity to secure a £40,000 deposit, which is oftentimes impossible.